Despite an encouraging trend, CAE still has a lot to make up for after a decade that many analysts would be quick to describe as lost. While growth has been real, with sales doubling between 2014 and 2023, value creation has remained flat, with earnings per share barely changing over the period.

The same dynamic applies to cash flow, with uneven, up-and-down cash generation. The downside of CAE's business is that it remains highly capital-intensive, with ongoing modernization requirements and, ultimately, a low return on capital employed.

Over the ten-year cycle, net debt has soared to a critical level. At the end of last year, the sale of the medical division - which accounted for only 4% of sales and was therefore an insignificant part of the Group's business portfolio - was aimed at bolstering the company's coffers and improving its solvency ratios.

The Canadian group also operates a defense business, which accounts for 44% of sales. In chronic difficulty, this is the weak link that drags the whole Group down; margins are four to five times lower than in the civil aviation business.

It is in this latter segment that CAE must capitalize. The company has an unrivalled infrastructure - 70 sites worldwide, 170 aircraft models, 135,000 pilots trained every year via over a million hours of simulation - with a very real opportunity for organic growth. with a very real opportunity for organic growth, as the number of practicing pilots is set to increase by 50% over the next ten years, and half of today's pilots will be reaching retirement age by then.

For the Canadian company, the year just ended was a perfect continuation of the long-term trend. The defense segment suffered a $658 million write-down, while consolidated growth performance was driven entirely by the civil aviation segment - as well as by a favorable exchange rate, which should not be overlooked.

In the long term, it would not be surprising if an activist were to take up the issue and demand a separation of the two segments. Without the ball and chain of the defense business, it's easy enough to argue that the civil aviation business - which had sales of $2.4 billion and an operating profit of $442 million for the fiscal year just ended - could shine in its own right, and be worth more than its current market capitalization.

In the meantime, the consolidated group is trading at ten times this year's expected EBITDA.